The brief below explains the current challenges in construction activity facing headwinds in Canada’s most populous provinces: Ontario and Alberta. It further examines the recent growth in residential construction in British Columbia and Alberta, which also face similar growth-restricting challenges but have been able to expand the construction of residential dwellings.

Toronto’s Construction Decline: An Overstated Concern? by Murtaza Haider

Leveraging the insights of 24 politicians and industry experts alongside the contributions of 100 delegates from diverse sectors including government, business, unions, academia, and non-governmental organizations, the summit aims to rigorously evaluate the economic, environmental, and social advantages of enhanced transit systems.

The summit is poised to generate strategic recommendations intended to illuminate a path forward, thereby ensuring that the future trajectory of Toronto’s transit system markedly surpasses its recent historical challenges. Stakeholders and interested parties are encouraged to engage in this critical discourse, which promises to be at the forefront of shaping the region’s transit landscape.

Since interest rates began to rise in early 2022, housing affordability in Canada has worsened. And while the Bank of Canada’s recent and expected rate cuts may improve affordability, a review from Desjardins Economic Studies concluded that a return to pre-pandemic levels is unlikely.

To recap: housing prices surged from 2009 to 2017, with a brief moderation in 2018 due to stress test changes. Between April 2020 and February 2022, ultra-low interest rates caused housing prices to skyrocket. The subsequent rapid rate hikes worsened affordability, with higher mortgage payments making already expensive housing even more out of reach.

The bank’s report offers some hope for prospective homebuyers, however, as Desjardins predicts a slight buyer opportunity in late 2024 or early 2025 year, if interest rates decline as expected. However, this forecast relief comes with some caveats.

The Desjardins Affordability Index (DAI) measures housing affordability in Canada’s regional markets. The index compares the decline in mortgage payments from falling interest rates against the anticipated rise in housing values due to lower rates. Given that any decline in interest rates is expected to be moderate in the short term, mortgage payment relief will be minimal and likely offset by increasing housing values. DAI also expects muted income growth — the other oft neglected variable in determining affordability — therefore the likelihood of improved affordability relief is only moderate, if at all.

The report’s findings may help explain the outward migration from Ontario to the western provinces. Despite recent affordability erosion in Alberta, housing prices in that province remain significantly lower than in other Canadian jurisdictions. Considering that average household incomes are higher in Alberta compared to Ontario, the western migration is understandable.

Housing affordability will likely be a key issue in next year’s federal elections. Election years usually bring promises of measures to improve affordability. Extending the amortization period, for example, which currently stands at 25 years in Canada, may feature in the manifestos of leading contenders.

Desjardins’ analysis warns that extending the amortization period could worsen affordability in the medium term, as rising housing values would negate the immediate benefits of longer amortizations. While a few short-term beneficiaries might purchase before prices escalate, most prospective buyers won’t. Therefore, current and future policymakers should leave amortization periods unchanged.

Housing advocates in Canada have criticized the rapid increase in international students and non-permanent residents (NPRs), arguing that this surge has driven up housing demand. In 2022 alone, Canada’s population grew by a million, with the current annual growth rate rivalling that of some African countries.

The report estimated a planned reduction in NPRs by 25 to 35 per cent by the end of 2026 but found no evidence that this would improve affordability. Their nuanced findings highlight that NPRs are more active in the rental market, with limited impact on the resale market. However, a more significant side effect of reduced population growth could be a reduction in housing supply, as some NPR workers are employed in construction. This lower supply could exacerbate the demand-supply imbalance.

The report also simulated the impact of an eighties-style recession on housing affordability. Surprisingly, their conclusions mirrored our previous discussions on the unintended consequences of recessions restoring affordability. The report noted that price declines and lower mortgage payments would be accompanied by massive layoffs and income losses. It warned that “those hoping for a recession should weigh their homebuying ambitions against immense longer-term economic and social costs.”

If a recession, or slowing population growth, or extended amortization periods cannot improve affordability, what can? The answer lies in building more houses — many more. Desjardins asserts that “increasing housing supply is the only sustainable long-run solution.” We concur, as does the Canada Mortgage and Housing Corporation, which estimates the country needs 5.8 million new homes built within the next decade to restore housing affordability.

Canada’s policymakers have grappled with housing affordability for a while now, often resorting to perceived quick fixes. However, there are no quick solutions to this issue. The only answer is to increase supply, which requires a concerted effort from both the public and private sectors and a consensus that building more homes is imperative.

Urban planning literature and bicycle enthusiasts in North America always draw attention to the widespread use of bicycles in the Netherlands, where bicycles are an efficient mode of travel that competes with cars and public transit. The Dutch demographics are unique, as are the climate and other enabling factors, such as the older age of the built environment constructed before the War for non-motorized modes, preferential design for bicycle infrastructure in the newly developed neighbourhoods, and relatively flat terrain.

Consider that both Montreal and Amsterdam are located on islands. However, Amsterdam is distinguished for its flat, low-lying areas, while Montreal is known for its most prominent feature, Mount Royal. For cycling, flatness helps, but mountains don’t.

Remember how different these cities are in climate. The average temperature in Amsterdam ranges from 3.5 degrees Celsius in January to 18 degrees in July. Montreal has freezing weather. The average temperature in January is minus 9 degrees Celsius. The mercury regularly reaches north of 25 degrees Celsius in summer. To make this more interesting, Montreal gets tons of snow. There are two things cyclists struggle the most with within Canada: streetcar tracks and snow.

And if you didn’t know, Amsterdam hardly gets any snow that lasts on road surfaces.

More traffic deaths in 2022, particularly among cyclists over 75

Earlier in April 2023, Statistics Netherlands reported increased road deaths in 2022. The main contributor to the growth in fatalities was cyclists over the age of 75. While fatalities increased in 2022 for cyclists and car occupants, the jump was more pronounced for cyclists. In 2022, cyclist deaths increased by 84 and car occupants by 50. The 21 percent increase in road deaths in 2022 over the previous year comprised mostly men, who accounted for 522 deaths.

Road deaths rose the most among seniors aged 75 and over in the Netherlands. Relative to 2021, deaths amongst seniors increased by 59 percent in 2022. Statistics Netherlands noted that “traffic victims aged 50 years and over are relatively likely to be involved in a bicycle accident, while younger victims (under 50) are more likely to be killed in a car accident. In relative terms as well, the number of senior cyclists involved in a fatal road accident increased.”

Collisions with motorized vehicles were responsible for three-fourths of all cyclist deaths in the Netherlands in 2022. Collisions with passenger cars or vans accounted for half of all cyclist deaths. “One quarter of all bicycle deaths were not due to a collision. These cyclists died after a fall, due to becoming unwell, wrong steering, bad road surface, slipperiness, or a foot between the spokes, among other things. Over two thirds of these victims were 70 years of age or older,” noted Statistics Netherlands.

Bicycle is a healthier mode of travel for individuals and the planet. It costs less to install bicycle infrastructure than road and transit infrastructure. Yet, it might only be a feasible mode of travel for some demographics and places. Its wholesale adaption as a mode of travel comes with huge risks. The cycling enthusiasts and planners advocating for its mass adoption seldom mention the risks, which are considerable given that cyclists account for 40 percent of all road deaths in the Netherlands.

Collision or fall are not the only risks cyclists face more than those using other modes of travel. The financial risk is also at play. Since cycling can be done safely for shorter distances than by cars or public transit, those who adopt bicycles to work in North America will limit their employment or residence options. Cyclist commuters must find work near home or home near work. This restricts choice sets for employment and residence, resulting in suboptimal choices.

The bicycle mode share can be expanded by providing safe infrastructure for cyclists in Canada. Yet, the Dutch experience in road safety must not be overlooked, where cyclists represent 40 percent of all road fatalities.

• Crime is more frequent on subway stations than subway trains or buses.
• Crime is more prevalent on terminal transit stations or transfer stations (Yonge and Bloor) where commuter volumes are high.
• Crime on public transit increased when transit ridership declined during the pandemic.

Prof. Haider recommended that the TTC consider increasing vigilance and monitoring of transit stations in the downtown core and other transit stations where transit ridership are notably higher. We have already identified those stations to be in downtown Toronto or the terminal points of transit lines. We would also recommend the use of artificial intelligence-based technologies that can readily be mounted on existing video feeds collected by cameras on TTC property and vehicles. For instance, ZeroEyes provides technology that can identify in real-time from the video feeds if weapons were brandished, subsequently alerting the police and other security personnel.

You can read the commentary on LinkedIn by clicking HERE.

Meta-analysis is a statistical technique for combining the results from multiple similar studies. The talk will provide a brief introduction to meta-analysis and will demonstrate how to perform meta-analysis in Stata. The -meta- command offers full support for meta-analysis, from computing various effect sizes and producing basic meta-analytic summaries and forest plots to accounting for between-study heterogeneity and potential publication bias. Examples demonstrating how to conduct meta-analysis within Stata will be provided. These examples will focus on the interpretation of meta-analysis under various models, meta-regression, subgroup analysis, small-study effects and publication bias, and various types of forest, funnel, and other plots.

You can read the Column in the December 06 issue of the Financial Post.

To register for the event, please visit https://www.torontomu.ca/city-building/events/2022/11/national-housing-deficit-webinar/.

Addressing the National Housing Deficit with Urban Analytics Institute

The Urban Analytics Institute at Toronto Metropolitan University researches data-driven solutions to urban issues, producing insights on a variety of topics, focused mainly on real estate and housing economics, consumer finance and smart cities. Its current research explores the future of urban transportation given the broad switch to telework, and ways to increase housing supply in Canada and restore affordability.

In this session led by Dr. Murtaza Haider (Professor, Real Estate Management, TRSM), we will discuss UAI’s comprehensive review of the reasons behind the accumulation of a national housing deficit approaching four million dwelling units, and the changes in policy, strategies and designs needed to build housing at scale, with Assistant Professors in Real Estate Management Dr. Kiana Basiri and Dr. Anson Ho, and research associate Meet Shah.

We will be ending this session promptly to allow attendees to commemorate Remembrance Day.

The six-member expert panel, jointly commissioned by the Federal and B.C. governments, went beyond the oft-cited demand-curbing recommendations of higher transfer taxes and penalties. Instead, the panel focused on the lack of housing supply in B.C., and the lucklustre efforts to address it.

Read further in The Financial Post.

The presentation was made at the 2020 BOMA NXTEK Forum.

You can watch the brief video at https://youtu.be/tPZZOLuzXSQ.